Smats FX weekly market report | Monday 03 February 2020

USD

The US Dollar climbed on Friday after growing concerns of the Coronavirus forced traders into the safe-haven that is the USD. The main data release of the week will be non-farm payrolls set to be released on Friday, markets are looking at 160 000 jobs added for last month and an increase in the hourly wage by 0.3% month-on-month. The US balance of trade figure is due out on Wednesday, we expect the trade deficit to widen to US$-49.0 B from US$-43.1 B. Traders should be following the development of the Coronavirus during the week as it will greatly impact the currencies throughout the week.

Influences on HKD, SGD & AED

Hong Kong will be releasing their GDP growth rate for the 4th quarter of last year on Monday, the yearly figure has been forecast to decline from -2.9% to -4.5%, on Tuesday, the retail sales is likely to have dropped by 20% for December. The Dirham is likely to be in for some good news as the UAE’s PMI is likely to increase from 50.2 to 51.8 on Tuesday. Singapore will be releasing their market PMI numbers for January on Wednesday, an increase of 0.5 is expected, which will bring the figure up to 51.5.

AUD

The Australian Dollar weakened last week despite having positive data last week as the Coronavirus scares Aussie Dollar traders. This week, the Reserve Bank of Australia will be making their policy statement on Tuesday, we expect the rate to remain at 0.75% but we could be seeing hints of easing later in 2020. On Thursday, Australian Dollar retail sales are likely to dip by 0.2% in December while the trade balance has been forecast to widen to A$5.8 B from A$4.08 B. Australian Dollar traders should be keeping an eye out for the performance of the Chinese market as they open for the first time since the Coronavirus blew up.

NZD

The Kiwi Dollar will be releasing some top tier data this week as they look to reverse some of the losses from last week’s Coronavirus scare. The unemployment rate is expected to remain at 4.2% for the fourth quarter after the third quarter saw a jump from 3.9%. Quarterly inflation expectations are out on Friday, after we saw the two-year inflation drop from 1.86% to 1.8% in the last meeting, we hope to get some insight as to the plans for the RBNZ going forward. New Zealand Dollar traders should be keeping an eye out for the performance of the Chinese market as they open for the first time since the Coronavirus blew up.

EUR

The Euro struggled last week against most major currencies, but it welcomed a much need boost following a huge crash in the emerging market currencies. Last week’s GDP data out of Italy, France and the Eurozone looked bleak for the Eurozone and hopefully they can turn things around this week. Final PMI numbers are expected out for Italy, Spain, Germany, France and the Eurozone this week, the manufacturing figures are likely to rise across the board. Just the German services PMI is likely to rise while the others fall, the Eurozone services figure is likely to drop from 52.8 to 52.2. On Wednesday, the Eurozone retail sales are likely to have dropped by 0.4% for the December, which could see the Euro weaken slightly upon its release.

GBP

The British Pound saw unprecedented strength towards the end of last week as the UK officially left the European Union. Let’s see if the GBP can hold onto its gains from last week! They only have the one release this week in their final PMI readings for January starting on Monday, the manufacturing PMI is likely to remain at 49.8 while the non-manufacturing figure is also expected to hold steady at 52.9. Should these figures miss expectations we can expect to see a drop in GBP strength.